The proliferation of smartphones and tablet computers has brought electronic commerce into the next level—mobile commerce. A main driver for new devices and new applications (apps) is convenience. Automation or the ease of replacing a complicated task with a simplified alternative for the human user has been the impetus for numerous innovations. This trend is demonstrated in Apple's devices such as iPhones and MacBook computers.
A purpose of the current invention is to speed up and make secure 2 types of purchase made via electronic payment. The first type is purchases made in a retail store; the second type is online purchases via an Internet-connected computer. For both types of purchase, there are 2 essential steps: (1) entry of payment card (credit card, debit card, prepaid card, etc.) data, (2) authentication and authorization for the use of a payment card. For in-store purchases, data entry is commonly accomplished by swiping a plastic payment card; for online purchases, data entry is often accomplished by manual input. For both types of purchase, it is possible to add an optional confirmation.
In the rest of this specification, the first step is referred to as PDE (payment data entry); the second step is referred to as AA (authentication and authorization); the third and optional step is referred to as confirmation.
In a typical in-store purchase, PDE and AA take place at a POS (point-of-sale) counter with the assistance of a POS operator or a sales agent. After PDE (swiping the plastic card, for example), the POS system contacts a payment system operator to request payment AA.
For a purchaser with a mobile communication device installed with a special app, the 2-step task is simplified to “scan and approve.” For example, Starbucks provides the “My cards” app to expedite data entry. In a store, a sales agent scans the barcode generated by an app on a mobile device. The scan result is then relayed to the POS system to complete payment AA. Such a solution is referred to as a barcode solution in this specification.
The barcode solution speeds up PDE and adds security to a transaction because a purchaser does not have to remove a payment card from his purse. The barcode solution is attractive because barcodes are well understood and have been adopted around the world.
However, there are a number of issues that hinders large-scale adoption of the barcode solution. First, such apps are only available from a few retailers. Second, the stores must be equipped to perform scanning functions. The retailers often attach their apps to a rewards program to drive customer retention. Often, a customer has to register and administer his account for each retailer. As the number of these apps increases, it becomes a burden for users to keep track of the apps and the associated accounts.
An alternative to the barcode solution is the wireless solution in which a mobile communication device sends payment data wirelessly to a POS system. In the wireless solution, data exchange takes place between a mobile communication device and a POS system over a short distance. For this solution, a retailer has to upgrade its POS system to enable wireless data exchange.
Consider the scenario that a purchaser is standing in line waiting for check out. While waiting is undesirable, a purchaser may not want to speed up the payment process. For one thing, he may still change his mind about the purchase before the actual check out. Once at the check out counter, the purchaser is no longer interested in a wireless solution because a barcode scanner is readily available at the counter. Finally, a potential problem is that the wireless solution exposes private data to wireless security threats.
Among the wireless solutions, the use of NFC (near-field communication) seems attractive. However, the practical distance for today's NFC technologies is between 5 cm to 20 cm. At such distance, a purchaser is very close to a POS terminal—the barcode solution is readily available and cheaper. Further, NFC is susceptible to security threats; it is easy to sniff NFC radio signals with today's technology.
NFC-based solutions are attractive in a crowded arena—for example, automatic ticketing in a sports arena, theater, amusement park, or public transportation vehicle. These solutions require both a mobile device and a POS terminal to be NFC capable, a requirement that may not be satisfied for many consumers and retailers.
Barcode solutions are the cheapest, requiring the least amount of investment for both retailers and consumers. As barcode scanners have been universally adopted, the price of a barcode scanner is low. For most retailers, the added hardware cost is zero.
The barcode solution allows for easy adoption, as it is a software-only solution. The POS system must be installed with payment software. For consumers, a special app, or widget or browser extension or installed service, for a mobile or fixed device is available for free. An added advantage of this approach is that it is unlikely for barcode scanners to be replaced by alternate equipment anytime soon.